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Last year only about a third, 35 percent, of single family rentals made a profit on their rental income. The 3.8 million that lost money or broke even saw their owners' dreams of a steady, annual rental income evaporate into the ether.

Single Family Rentals Boost Professional Property Management Services

Last year only about a third, 35 percent, of single family rentals made a profit on their rental income. The 3.8 million that lost money or broke even saw their owners’ dreams of a steady, annual rental income evaporate into the ether.

Lack of profits isn’t due to lack of effort. Nearly eight out of ten individual investors manage their own property. They run the ads, interview the tenants, fix the toilets, answer the midnight calls, cut the grass, collect the rent, evict the bums, then clean, paint and try to fill the vacancy as fast as possible. Some 18 percent of owners spend 25 percent or more of their time managing their rental property and 20 percent spend 20 percent or more of their rental income on maintenance, according to a major study last fall by the Census Bureau.

As single family rentals have exploded around the country, so have property management firms who serve the single family market. As much as 20 percent of the nation’s 21 million single family rental units use professional property management firms.

One of the fastest growing management firms serving the single family marklet is Real Property Management. RPM has expanded to 200 franchisees in 44 states in the past three years as SFR management has grown to 70 percent of its business. Foreclosures and investors, who are creating more rentals every day and the popularity of renting as opposed to owning all are making the single family rental the hottest market in real estate. Single family rentals, and the need for property management services to take care of them, are growing fastest in market with the most foreclosures.

“Our typical customer is someone who has decided to get professional help after managing their properties by themselves for a year or two,” said Valerie Christiensen, vice president of market and franchise development for RPM.

One of the most important motivators for landlords to get professional help is helping to manage tenant turnover. Losing a month or more of rent can wipe out a year’s profitability. Christiensen points out that SFR tenants are a different demographic that apartment dwellers. They older, more likely to be couples or families, they have higher incomes than multi-family tenants and they tend to stay longer.

“With the single family rentals available today, a family doesn’t need to tie itself down to a home. With the difficulties many people are having getting mortgages today, the single family lifestyle is a great option that barely existed a few years ago,” said Christiensen.

RPM also serves banks and mortgage servicers who want to rent out foreclosures. It’s a small part of their business and many are watching Bank of America’s pilot program to rent out its foreclosures, taking them off the REO market and earning some income.

3 comments

  1. I am a native Oregonian, who has lived in Salem and on the Oregon coast my eirtne life. I have watched and participated in property ownership and investment since 1971. I have also been a licensed realtor in the state of Oregon for over 25 years, now retired. I developed Hidden Cove Bed and Breakfast and long term rentals, a barrier-free property on Devil’s Lake.I am a widow, rowing my own boat in a very difficult economy. Most of my personal assets are invested in my property on the lake. I came here to retire; produce income to add to my social security income; and age in place in a beautiful place on the planet.This was my retirement dream. I achieved it .only to have my livelihood threatend by a city council that does not understand basic economics.I want to see us preserve the individual property rights we are entitled to in this state. With the average price of housing in our city .. between $250,000- $300,000, the purchaser of a home needs 10-20% down and an income of a minimum of $3,000-$3,500 per month. If this home in Lincoln City is a second home, then double that income per month (due to the fact owner’s also have to afford a primary house payment in their city of primary residence). So now we are looking at a total income of $72,000 $84,000 per year! How many Oregonians have incomes of $72,000- $84,000 per year? Doesn’t it stand to reason people are buying properties jointly and renting their second homes to afford the payments and the property taxes??? Just look at the behavior of the market and you will find the truth. Last quarter, TRT taxes increased 7%. We are bringing more business to Lincoln City. That is a good thing!The new VRD ordinance is restricting our right to rent our second home investments. Yes, second homes are also investments! This ordinance will eventually cause the demise of property values in Lincoln City over time. Only high-income families will be able to own second homes here. The average Oregon family cannot even dream of owning a piece of the Oregon coast. Entreprenurial incentive is being controlled by short-sighted government intervention.We need to be heard! Our interests need representation! Those of us who own VRD’s and rental properties have a voice. There are only twenty-two of us (VRD owners) in the city who can even vote! We are paying property taxes that support this community and TRT taxes that few communities have the luxury of enjoying. Maybe we should encourage some re-zoning. It does not make sense to me to have waterfront properties zoned R-1. I think a higher and better use for waterfront property is vacation rental in a resort community, don’t you? Let’s take a look at Lincoln City’s zoning. Maybe it is due for an overhaul! If you move to Lincoln City to retire; live here full time; and buy a first row, second row, or third row home on the west side of Highway 101 or a lakefront, riverfront, or bay front property; you are deluding yourself if you think your neighborhood will be full of single-family owners!Check out the budget and educate yourself to where the TRT money goes. Look at the VCB and where they spend money .. Let us hold Lincoln City council members and our mayor accountable! Only one third of all properties owned in Lincon City is owned by people living and voting here! All property owners in Lincoln County who do not reside here have a voice that needs to be heard. Maybe we need to organize and refuse to pay our property taxes! If we did that in mass do you think the city council would figure it out? It is time to stand up for our property rights!I realize I am taking a risk to verbalize my opinion when I live here as a full-time resident. I cannot be silent any longer. My financial well being may be in the hands of people who do not understand basic economic principles! Yikes!!!!!

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